Photo: Jacques Boissinot The Canadian Press François Legault said the $11 billion deficit announced Tuesday is equivalent to 1.5% of GDP. According to him, this is less important than others declared by previous governments.
Accused of being the “king” of deficits after the tabling of a budget marked by a shortfall of 11 billion, the Prime Minister François Legault considered that this situation is nevertheless “reasonable”.
The day after submitting his budget plan, Mr. Legault defended himself against attacks from his adversaries by asserting that the economic situation requires maintaining government spending.
The Prime Minister put the current financial situation into perspective by emphasizing that the deficit of 11 billion, for the financial year 2024-2025, is recorded after payments intended to repay the debt. In an accounting sense, calculating income minus expenses, it is 8.8 billion.
Mr. Legault said this amount is equivalent to 1.5% of gross domestic product (GDP).
“I think it’s something reasonable,” he said in a press briefing after question period.
According to him, this shortfall is less significant than others declared by previous governments.
“When you look in the history of Quebec, there have been governments five times that have had a bigger deficit than the rest of us,” he said.
On Tuesday, when he revealed the deficit of 11 billion, after payments to the Generations Fund, Finance Minister Eric Girard recognized that this is an absolute record in dollars. He also pointed out that as a percentage of GDP, larger shortfalls have been reported by other governments.
GDP is better
Mr. Legault preferred to see things from a GDP perspective on Wednesday. “We can’t look at it in absolute terms, we have to take into account inflation or GDP,” he said.
The Prime Minister declared that PQ governments ran deficits of 4.7% of GDP in 1980-1981, 3.8% of GDP in 1984-1985, then 1.7% of GDP in 1996-1997. The Liberals ran a deficit of 3.1% of GDP in 1992-1993, then 3.3% of GDP in 1994-1995, he added.
In 2021, at the heart of the pandemic, Mr. Legault's government recorded a deficit of 10.7 billion after payment to the Generations Fund.
The Association of Quebec Economists found that the growth in per capita spending in Quebec was 36% from 2017-2018 to 2022-2023, while the average for Canadian provinces was 27%.
“Essentially, it is to improve access and then the quality of education and health services,” Mr. Legault explained on Wednesday. Then, there was catching up to do with the cuts made by the former Liberal government. »
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In the morning, the interim Liberal leader, Marc Tanguay, accused Mr. Legault of being the “ king” of deficits.
“The rigor is absent with François Legault and we have the result today,” he said at a press briefing. This morning, we are faced with it, it is the failure of François Legault, the king of the debt and then the deficits. »
The opposition thus referred to a controversial subsidy granted for Los Angeles Kings matches in Quebec.
Plan to return to balanced budget
On Wednesday, Mr. Legault set the end of the next plan to return to budget balance at 2029-2030.
“We will restore budgetary balance gradually over five years,” he said. I am very confident that we will get there. »
The Prime Minister affirmed that the return to zero deficit will depend on economic recovery and an operation to reduce state spending. He did not specify to what extent these factors will combine.
“We are going to review spending to reduce bureaucracy, to be able to remove spending that is not effective,” he said.
Mr. Legault pledged not to reduce the number of civil servant positions that provide services to the population, such as teachers and nurses.
“As for the administrative part, there are places where we can make gains,” he said.
Budget documents tabled Tuesday indicated that the new deadline for returning to a balanced budget was fiscal year 2029-2030 “at the latest.” At a press conference, Mr. Girard did not rule out achieving this in 2028-2029.
Credit rating
The Minister of Finance wanted to be reassuring on Wednesday regarding the potential impact of the 11 billion deficit recorded this week on Quebec's credit rating. In November, Mr. Girard predicted that the deficit would be 3 billion in 2024-2025.
The minister explained that currently, the credit rating of the Quebec government ranges from AA to AA-, according to the four main agencies. Discussions took place before the budget was tabled with their representatives. It is expected that in the coming days, two of them will comment on the evolution of Quebec's financial situation in light of the most recent budget.
“They will certainly say that the deficit is high, but that it is positive, that we are maintaining the objectives of debt reduction, of returning to a balanced budget,” said Mr. Girard .
In January, Mr. Legault and Mr. Girard warned that the next deficits would be larger due to higher than expected salary increases granted to state employees in December.
According to budget documents, the government had to add about $3 billion more than it anticipated in November for the renewal of collective agreements.
Wednesday, Mr. Girard explained that it became clear to him at the end of December that the shortfall would be greater than the deficit of 3 billion forecast for 2024-2025.
“With the end of the fiscal year, in terms of negotiations in the public sector, there are many things that took place between December 15 and December 27,” he said. he said.